It has been about a month since the last earnings report for Vertex Pharmaceuticals (VRTX Quick QuoteVRTX - Free Report) . Shares have added about 15.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Vertex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Q1 Earnings Beat, Trikafta Drives Sales

Vertex reported first-quarter 2024 adjusted earnings per share of $4.76, which beat the Zacks Consensus Estimate of $4.10. Earnings increased 56% year over year, driven by higher product revenues, lower costs and a lower tax rate in the quarter.

The company reported total revenues of $2.69 billion, comprising cystic fibrosis (CF) product revenues. The figure beat the Zacks Consensus Estimate of $2.56 billion. Total revenues rose 13% year over year, primarily driven by higher sales of Trikafta/Kaftrio (marketed as Kaftrio in Europe) in U.S. and ex-U.S. markets.

Quarter in Detail

The company currently markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.

CF product sales rose 8% year over year in the United States to $1.52 billion, while sales outside the United States increased 21% to $1.17 billion.

Trikafta generated sales worth $2.48 billion, up 18.5% year over year. Trikafta sales beat the Zacks Consensus Estimate and our model estimate of $2.41 billion and $2.33 billion, respectively.

The upside was driven by the continued robust performance of Trikafta in and outside the United States, fueled by label expansions to younger age groups mainly in patients ages 2 to 5 years old. However, a benefit from channel inventory phasing boosted sales in ex-U.S. markets, which is expected to reverse in subsequent quarters.

Sales from other CF products declined 25.5% year over year to $207.0 million. Sales of these drugs were hurt by patients switching to Trikafta.

Vertex did not announce any sales figures for Casgevy, as the company will recognize revenues for Casgevy near the end of the patient journey at infusion. It expects to record Casgevy sales from the second half of 2024.

On the conference call, Vertex said it now has more than 25 activated authorized treatment centers or ATCs in all regions where the therapy is approved. Multiple patients have initiated cell collection. Vertex said it is also making great progress with payers It has established contracts and policies in the U.S. commercial market. In outside U.S. markets, it is progressing for reimbursement and access, either through reimbursement agreements or early access programs.

Costs Rise

Adjusted operating expense was $1.02 billion in the quarter, down 15.7% year over year due to lower acquired in-process research and development (IPR&D) costs.

Adjusted R&D expenses rose 1% year over year to $669.7 million due to the expansion of the company’s early-stage pipeline, offset by the completion of multiple late-stage studies for Casgevy, vanzacaftor and suzetrigine.

Adjusted selling, general and administrative (SG&A) expenses increased 38.1% to $272.0 million in the reported quarter due to expenses for CF launches and commercial launch activities for Casgevy

During the reported quarter, Vertex recorded acquired in-process research and development (IPR&D) costs of $76.8 million compared with $347.1 million in the year-ago quarter.

Adjusted operating income was $1.34 billion in the quarter, up 48% from the prior-year period.

2024 Guidance

Vertex maintained its previously issued financial guidance for 2024. The company expects total product sales in the range of $10.55-$10.75 billion for 2024. The revenue range indicates growth of 8% at the midpoint. The revenue guidance includes sales from Casgevy from the second half of the year in approved indications and geographies.

Combined adjusted R&D, acquired IPR&D and SG&A expenses for 2024 are expected in the band of $4.3-$4.4 billion. The guidance includes approximately $125 million of IPR&D charges.

Adjusted R&D and SG&A expenses are expected to increase over the remainder of 2024 as it advances inaxaplin into phase III studies, initiates the suzetrigine phase III program in DPN and prepares for upcoming potential new commercial launches.

The adjusted tax rate is expected to be in the range of 20-21%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Vertex has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Vertex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Vertex belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Geron (GERN Quick QuoteGERN - Free Report) , has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Geron reported revenues of $0.3 million in the last reported quarter, representing a year-over-year change of +1400%. EPS of -$0.09 for the same period compares with -$0.07 a year ago.

Geron is expected to post a loss of $0.11 per share for the current quarter, representing a year-over-year change of -22.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.6%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Geron. Also, the stock has a VGM Score of F.